The review of Singapore's economic growth forecast made front-page news last week. Amid concerns from the Government, business leaders and citizens on what impact the European sovereign debt crisis and other risks would have on the nation's growth, jobs and pay cheques, I found myself wondering: What does GDP really mean?

Some economists may disagree with me when I say that the current definition of gross domestic product, or GDP, as we know it, is deeply flawed.But I'm not the only one who thinks so. In fact, awareness of the shortcomings of GDP as a measure of a nation's well-being and an economy's sustainability has grown steadily in recent years.

GDP measures the value of output produced within a country in a given time period, usually a year or a quarter.

The key flaw is this: Any depreciation included reflects only changes to man-made capital such as equipment, but does not include growth's negative impact on public goods such as water, forests and clean air - that is, the environment.

The European Commission recognised this when it launched an initiative called 'Beyond GDP' in 2009, which aimed to develop indicators that are 'as clear and appealing as GDP, but more inclusive of environmental and social aspects of progress'.

Economic indicators such as GDP, the European Union's Beyond GDP website says, were 'never designed to be comprehensive measures of prosperity and well-being' - yet today, we see almost all countries, including Singapore, pursuing it as the ultimate sign of success.

Today, a combination of economic crises (think the 2008 financial crisis, and the more recent United States and European debt woes) and environmental disasters (flood, famine and deforestation) has created a global momentum for a radical revision of national accounting methods.

The World Bank accelerated this momentum earlier this year when, working with non-profit organisations such as Conservation International (CI), it launched Waves, or Wealth Accounting and Valuation of Ecosystem Services, which recognises the under-valuation of ecosystem services (such as tourism, clean air and water) as one of the main causes of ecosystem degradation and biodiversity loss.

In an interview with The Sunday Times last week, Dr Andrew Rosenberg, chief scientist at CI, explained how Waves seeks to engage finance ministries and economic planning agencies across the globe in implementing a process that values natural capital such as ecosystems in the national income.

National income measures the monetary value of the flow of output of goods and services produced within an economy over a period of time.

National income accounts are crucial because they form the primary source of information about the economy, such as GDP, and are widely used for assessment of economic performance and policy analysis in all countries, said Dr Rosenberg.

This is why it is important to integrate the economic value of ecosystems into national income accounts. This helps to address shortcomings in managing the environment and natural capital.

For example, while the income from harvesting trees for wood is recorded as income in national accounts, the simultaneous depletion of natural forest assets is not seen as a loss in capital.

This is despite the fact that deforestation would lead to lower air quality, increased risk of soil erosion and flooding, which have far-reaching consequences.

By focusing only on flows of output, GDP provides misleading signals to policymakers. This can result in leaders making wrong and misinformed decisions, said Dr Rosenberg. 'That's why we need to have green accounting... putting a market value on things like fisheries, forests and natural foods,' he added. 'One way to think about it is how much would it cost to replace the function that this environment provides?'

Hypothetically, the argument for green accounting is robust. However, in reality, the implementation has been challenging.

Nanyang Technological University environmental economics professor Euston Quah said the big question is how to get everyone to agree on a common method of valuing natural capital.

'There is tremendous disagreement within the scientific, business and government communities as to how we can put monetary valuations on the environment,' he said. This is why, even though the subject gained much attention when it first emerged in the 1980s, interest in it eventually fizzled out.

But Prof Quah recognises this: The concept is making a comeback now. 'Across the world, we have become more environmentally aware. There are big multilateral treaties on climate change being discussed, and people are putting pressure on governments to factor in the cost of the environment in the pursuit of economic growth,' he said.

'The world needs to sit down and convene more meetings to discuss this, and agree on a methodology of evaluations.'

The ramifications of this overhaul of GDP and national income are great. If the world succeeds and countries take stock of economic growth in relation to the depletion of their natural assets, net growth will be smaller, said Prof Quah.

'Society will then be able to decide, is it worth it? For example, if growing output by 10 per cent requires an 8 per cent loss in natural capital... this would affect how governments pursue policies of economic growth, and will also affect government spending.'

One interesting question: If all countries had been equipped with such accounting methods, say, 50 years ago, and it had been the standard, would it have changed the growth path of all the economies?

Take Singapore, for example. If we had had to account for our natural capital before our development years, would it have changed our industries or physical landscape?

The answer depends on how much natural resources a country has, said Prof Quah. In the case of Singapore, which has few natural resources, stable employment and income were, rightly, big priorities in the early development years.

Green accounting would unlikely have made a big difference to economic decisions as land would still have to be cleared to make way for housing and industries, he added.

What's interesting is, as the country develops, citizens now put a higher priority on the quality of life, and on things such as noise and air pollution, and clean, green spaces, he observed.

For resource-rich countries, however, green accounting becomes more important. The government needs to recognise the trade-offs involved in pursuing certain economic policies and the extensive impact they could have on its environment and the future cost of losing certain resources, especially if they play a big part in generating 'unseen' income, like providing regular rainfall, or tourism locations.

But if poor, developing countries wanted to do this, they would not likely have the capacity. Rich, developed nations can help build this capacity.

'It is right that we should put some resources into it to come up with a framework... the EU's efforts in driving 'Beyond GDP' are encouraging,' Prof Quah said.

Meanwhile, Dr Rosenberg feels companies can make a start by applying green accounting principles to their own business strategies.

'There will be increasing requirements for transparency and sustainability... I wouldn't be surprised if ultimately, stock exchanges, for example, demanded green accounts from their listed firms,' he said.

KEMAMAN, July 24 (Bernama) -- Pieces of plastic floating in the ocean often mistaken for food or jellyfish by turtles may be one of the reasons for their deaths.

World Wildlife Fund (WWF)-Malaysia Terengganu Turtle and Terrapin Conservation Programme chief Rahayu Zulkifli said shards of plastic were found in the stomach of dead turtles in the state.Thus, she urged the people, especially fishermen, to cooperate by not throwing plastics into the sea as they could kill turtles.

Speaking to Bernama at the launch of the WWF-Malaysia's "Protect Our Turtles" campaign here today, she said WWF-Malaysia had taken various measures to increase the turtle population, including by buying turtle eggs for hatching with the assistance of the Fisheries Department.

Rahayu said leatherback turtle was considered a critically endangered species as only 10 nesting areas were found in the state since 2000 compared to 10,000 areas a year in the 50s.

The green turtle is also listed as threatened even though many nesting areas were discovered in Terengganu, she said.

About 400 people, including tourists, who attended the campaign signed a pledge to help protect turtles and will not eat their eggs.

The Terengganu Fisheries Department and the Kerteh District Heritage Society also took part in the campaign.

KEMAMAN: To save the endangered leatherback turtles, some 400 people comprising tourists and locals have pledged to help protect turtles and not to eat their eggs.

World Wildlife Fund (WWF) Malaysia Terengganu Turtle and Terrapin Conservation Programme chief Rahayu Zulkifli said WWF Malaysia had taken various measures to increase the turtle population, including buying turtle eggs for the hatchery with the assistance of the Fisheries Department.

At the launch of the WWF Mal­aysia’s “Protect Our Turtles” campaign here yesterday, she said the leatherback turtle was considered a critically endangered species as only 10 nesting areas were found in the state since 2000 compared with 10,000 each year in the 1950s.

Rahayu urged the people, especially fishermen, to cooperate by not throwing plastics into the sea as they could kill turtles.

Pieces of plastic floating in the ocean often mistaken for food or jellyfish by turtles may be one of the reasons for their deaths.

She said shards of plastic had been found in the stomach of dead turtles in the state.

The green turtle was listed as threatened even though many nesting areas had been discovered in Terengganu, she said.

The Terengganu Fisheries Depart­ment and the Kerteh District Herit­age Society also took part in the campaign. — Bernama

SABAH's forestry chief believes that if the orang utan is going to survive as a species, it will be in the state -- due to its well-managed forests.

Datuk Sam Mannan's conviction stems from the forest governance which the state authorities had put in since decades ago although it was admittedly a different scene then when the forests were logged heavily.During the boom period when lands were expanded at a rapid pace, an alarming number of orphaned orang utan was reported at rehabilitation centres.

But Sabah is now a trailblazer in conservation efforts, fully aware that its rich biodiversity is crucial not only for Malaysia but globally.

"Some 75 to 80 per cent of orang utan in Sabah are either in protected areas or areas which are well-managed.

"The heartland of the orang utan is in Ulu Segama, Danum Valley, Malua and Deramakot -- which measures 450,000 ha in area," he said, in an interview at his office.

Forest reserves and parks make up four million ha or 53 per cent of its land area and there is no more of that compromise which took place more than 25 years ago.

Borneo, the third largest island in the world, is one of the mega-bio diversity hot spots with a myriad of plant and animal species, many of which are endemic to the island.

Deramakot is the world's first certified lowland mixed-dipterocarp tropical forest in 1997, and Sabah intends to repeat this success story in its other forest reserves like Ulu Segama.

Unlike decades ago when the land classification by the colonial masters enabled the rich lowland to be utilised for economic activities, the state government now insists that forest reserve land be replaced, and issues 50-100 year licences.

"If not for the revenue from palm oil which the Sabah government is enjoying, there is no way to expand our conservation efforts," he said, adding that the revenue has accelerated, beating that from forestry.

Forest revenue, which used to be a billion ringgit earner in 1979 (80 per cent of the state's revenue) has nose dived to RM100 million last year.

But "the drought period for timber earnings" should pass as through the long-term licences, Sabah should be able to receive RM500 million from the production of sustainable timber by 2030, he said.

In the interim period, the state must step up its efforts to be innovative and carve out earnings from non-timber sources.

These include tourism or sourcing geo-thermal energy from forests.

Money is needed to repair whatever damage done to the land but such conservation efforts would lead to a vibrant tourism industry, too.

Sam is all for plantation giant Sime Darby's support in the conservation efforts in Sabah, especially in the Ulu Segama area where it has been helping to restore 45,000 ha of degraded rainforest.

This is where the Tabin wildlife reserve is located and the critically endangered Sumateran rhino is found.

Sabah's biodiversity conservation and reforesting efforts have attracted a large number of foreign agencies and non-governmental organisations like the World Wide Fund for Nature, Japan International Cooperation Agency (JICA), Alexander Abraham Foundation, as well as business corporations like Marks and Spencer.

Foreign organisations such as the Royal Society United Kingdom which celebrated its 25 years in the Danum Valley is continuing its work with the Yayasan Sabah Concession Area.

Of immediate concern to Sam and his team is the 40,000 ha of forest reserve which was encroached by the small oil palm developers.

He hopes more corporations will take the cue from Sime Darby.

So far his enforcement has destroyed 5,000 of this encroached land but to embark on replanting a forest promises to be an expensive affair, costing not less than RM80,000 per ha.

Sam blames the small companies or individuals with oil palm smallholdings for giving the industry a bad reputation.

The culprits, he said, are those with bad agricultural practices, especially the smaller companies which do not respect the riparian reserves which form buffer or protection zones for the wildlife.

Because the wildlife sanctuary of Kinabatangan came about after the land alienation exercise (which explains its odd shape), the Forestry Department is also ensuring that natural corridors are provided for primates and other mammals.

In some instances, artificial bridges, using ropes, are provided to enable the primates to cross the rivers.

To Sam, the next 20 years is critical for Sabah, "we must not falter otherwise our rainforest will be in trouble".